Comprehensive Annual Financial Report for the ... - WMATA.com

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Washington Metropolitan Area Transit AuthorityFY 2009 Comprehensive Annual Financial ReportNotes to Basic Financial StatementsJune 30, 2009 and 2008(1) Summary of Significant Accounting Policies (Continued)The relative importance of each criterion must be evaluated in light of specific circumstances. Thedecision to include or exclude a potential component unit is left to the professional judgment ofmanagement. Included within the Authority's financial reporting entity are the planning, developmentand operation of the transit facilities serving the Washington, D.C. metropolitan area which are fundedfrom the combined resources of the U.S. Government, the State of Maryland, the Commonwealth ofVirginia, the District of Columbia, the participating local jurisdictions, and the Authority's operations.The Authority does not report any component units within its financial reporting entity.(c) Basis of AccountingThe Authority prepares its basic financial statements using the accrual basis of accounting. Theactivities of the Authority are similar to those of proprietary funds of local jurisdictions, and, aretherefore, reported in conformity with governmental accounting and financial reporting principles issuedby GASB. The Authority records revenues when earned and reasonably measurable and recordsexpenses when a liability is incurred, regardless of the timing of the cash flows. Revenues collected inadvance are deferred until the period in which it is earned. The Authority had applied all applicableFinancial Accounting Standards Board Statements and Interpretations, Accounting Principles BoardOpinions and Accounting Research Bulletins, issued on or before November 30, 1989 that did notconflict with or contradict GASB pronouncements. The government has elected not to followsubsequent private sector guidance.(d) Receivables and PayablesThe major components of the accounts receivable balance are payments due from governmentalagencies (53.6 percent), companies (46.0 percent) and other receivables (0.4 percent).The major components of the accounts payable balance are payments due to vendors and contractors(67.9 percent), governmental agencies (27.0 percent) and other payables (5.1 percent).(e)Revenues and ExpensesThe Authority distinguishes operating revenues and expenses from nonoperating items. Operatingrevenues and expenses are those that result from providing services in connection with the Authority'sprincipal ongoing operation. The principal operating revenues of the Authority are charges to customersfor transportation that result in passenger revenues. Passenger revenues are recorded as revenue at thetime services are performed. Cash received for services that have not been performed are recorded asdeferred revenue.Operating revenues and expenses also include all revenues and expenses not associated with capitaland related financing, noncapital financing, or investing activities.Nonoperating revenues and expenses include investment income and expense from the Authority'spension assets that represents the excess or shortage of contributions over the annual requiredcontributions.27
Washington Metropolitan Area Transit AuthorityFY 2009 Comprehensive Annual Financial ReportNotes to Basic Financial StatementsJune 30, 2009 and 2008(1) Summary of Significant Accounting Policies (Continued)(f)InvestmentsInvestments are stated at fair value, which is based on quoted market prices. Investments consistprimarily of advanced contributions and interest earned on such contributions. These advancedcontributions are restricted for specific future capital projects.(g) Materials and Supplies InventoryMaterials and supplies inventory is stated at average cost, net of an allowance for obsolete inventory.(h) Transit Facilities and EquipmentTransit facilities and equipment are stated at cost, less accumulated depreciation and amortization.Determinations of the cost of rapid rail assets placed in service are made with the assistance of theAuthority's consulting engineers. Such cost determinations are based upon the historical costs of theproject provided by the Modular Input Output System (MiaS) reports. Interest expense related toconstruction and amounts expended in operating and testing each phase of the rail system prior tocommencement of revenue-producing operations are capitalized as intangible costs.Transit facilities and equipment in service are depreciated or amortized using the straight-line methodover the estimated useful lives of the assets. The useful lives employed in computing depreciation andamortization on principal classes of transit facilities and equipment are as follow:Buildings and improvementsRail transit facilitiesRevenue vehiclesOther equipmentIntangible costs20-45 years10-75 years12-35 years2-20 years40 yearsCapital assets include repairable assets, which are replacement parts with a unit cost of $500 or more.Other capital assets are defined as assets with an initial, individual cost of more than $5,000 and anestimated useful life in excess of one year.Any donated capital assets are recognized at their fair value on the date of donation.The Authority's policy is to expense maintenance and repair costs as incurred.(i)GrantsCapital grants and operating grants, such as jurisdictional, operating and interest subsidies, arerecognized as revenue when all applicable eligibility requirements have been met.The determination of the Authority's jurisdictional subsidies is based on its operating loss andnonoperating revenues, and does not include depreciation expense or the non-cash amount of OPEB.As a result, the Authority's change in net assets represents revenues from capital grants and subsidies,less depreciation expense and the non-cash amount of OPEB.28
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